Malcolm, the mayor of Schlafenberg, is being asked to choose the best among three proposals for a new water treatment plant. Plan A will cost $3 million to construct, purify $2 million worth of water per year, and lead to $1 million in operating costs. Plan B will cost $4 million to construct, purify $3 million worth of water, and result in $1.5 million in operating costs. Plan C, proposed by the mayor's son, will cost $7 million, purify $4.5 million worth of water, and result in $2.5 million of operating costs. Given this information, answer the following questions:

(A) Assuming that each proposal will last for five years, find the present values of each using a 7 percent discount rate. Which policy would you recommend?

(B) Find the internal rate of return for plan A to the nearest percentage point.

(C) If plan A lasts for four years, plan B lasts for three years, and each can be repeated, find the equivalent annuity values for each option using a

7 percent discount rate. Which would you recommend?